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January 31, 2010

Debit delivers for Visa Europe

Visa Europes 2009 financial results provide evidence that debit payment continues to grow, and now accounts for 75 percent of all Visa card payment volume in Europe. Significantly, while debit card numbers showed modest overall growth compared to 2008 (at a little over 3 percent), POS transaction numbers increased by almost 10 percent, and point of sale spending rose by more than 6 percent. Visa Europes fiscal 2009 ended in June of that year, with the total number of Visa cards (credit, debit, commercial and other) issued across the region amounting to over 380 million, a rise of 5 percent compared to 2008

By Verdict Staff

Visa Europe’s 2009 financial results provide evidence that debit payment continues to grow, and now accounts for 75 percent of all Visa card payment volume in Europe.

Significantly, while debit card numbers showed modest overall growth compared to 2008 (at a little over 3 percent), POS transaction numbers increased by almost 10 percent, and point of sale spending rose by more than 6 percent.

Visa Europe’s fiscal 2009 ended in June of that year, with the total number of Visa cards (credit, debit, commercial and other) issued across the region amounting to over 380 million, a rise of 5 percent compared to 2008. Purchases and cash withdrawals made on these cards totalled €1.3 trillion ($1.8 trillion). Some 11.2 percent of consumer spending at the POS in Europe was made with a Visa card.

The number of POS transactions grew by more than 8 percent, suggesting that consumers are using their Visa cards for an ever increasing proportion of their everyday spending – and, consequently, the average value of these POS transactions fell by four percent to €50.30.

However, the rate of growth for both POS expenditure and cash withdrawals on Visa cards has slowed significantly compared to 2008’s results, indicating that European consumers still retain a cautious attitude to card spending.

CI analysis of Visa Europe’s results show POS expenditure grew by only 3.7 percent in 2009 to reach €856 billion, whereas in 2008, the growth rate was 10.37 percent. Meanwhile, cash withdrawals grew by only 2.56 percent last year, compared to 8.15 percent in 2008.

Growth of debit and e-commerce

However, it is clear that debit is the mainstay of Visa Europe’s strategy, complemented by the advent of contactless payment for low-value transactions and prepaid cards.

Visa Europe CEO Peter Ayliffe said: “There are currently six million contactless cards in Europe but by the end of 2010 we expect there to be 12 million.

“Contactless payments will be as radical a change in the way we pay as e-commerce has been in the last 10 years. It provides a serious alternative to using cash for making small, everyday payments. It means less queuing and more convenience for consumers while increasing sales and lowering costs for retailers.”

Visa Europe’s V PAY debit solution is also gaining traction, with more than 7.5 million cards issued by the end of 2009. Over 120 banks in Europe are committed to issuing V PAY for a total of 50 million cards. E-commerce also represents a huge growth sector for Visa, and now accounts for 20 percent of all Visa spending in Europe.

Ayliffe added: “We have achieved strong results in 2009 despite the very challenging economic conditions. What is changing is the way people spend their money. There has been a marked shift towards debit card spending, particularly for lower value transactions, as well as a continued growth in online spend.

“The number of PoS transactions on a Visa debit card is up by over 10 percent in Europe, representing 77 percent of all Visa transactions. This proves that consumers and retailers are increasingly viewing debit cards as a superior alternative to cash. This will bring significant benefits to the European economy as we move further away from inefficient and costly cash payments.”

Helping Visa Europe’s push into increased debit and e-commerce penetration is its investment in its processing systems and fraud detection systems, such as Real Time Risk Scoring, which analyses and risk-scores card transactions as they happen.

Alongside initiatives such as EMV and the online authentication system Verified by Visa, during 2009, the fraud to sales ratio on Visa cards in Europe decreased by nearly 15 percent.

Financial results

Visa Europe 2009

 

2006

2007

2008

2009

% change y-o-y

2006-2007

2007-2008

2008-2009

Gross cardholder expenditure (€trn)

1.07

1.18

1.29

1.34

10.28

9.32

3.88

POS expenditure (€bn)

671.05

747.99

825.56

856.46

11.47

10.37

3.74

Cash withdrawals (€bn)

406.67

438.16

473.86

485.98

7.74

8.15

2.56

Source: Visa Europe, CI

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